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Investing Profile

Tools - Determining Your Profile

Given perfect foresight, we would all choose the higher returning investment. Unfortunately, every type of investment carries a certain degree of risk and generally the greater the potential reward the greater the risk. The first step in selecting an investment strategy is to determine your individual ability and willingness to take on higher risk. The following self-scoring worksheet will help you focus on the key components of your risk-taking capacity: Time, Financial Resources and Personal Attitude.

I. TIME

How many years before you plan to start taking retirement income from this account?
A. 0-3 years	(5 points)
B. 4-10 years	(15 points)
C. 11-15 years	(25 points)
D. More than 15	(35 points)

If your employer's retirement plan allowed withdrawals or loans, would you plan to take one within the next 10 years?
A. Yes	(1 point)
B. No	(5 points)

II. FINANCIAL RESOURCES

Your plan may be for your retirement savings to go untouched until you retire. Unfortunately, circumstances may create immediate cash needs that you should prepare for either through a separate savings plan or at least by how you plan your investment strategy. If you have substantial investments outside of your retirement plan, it may be more appropriate to invest your retirement plan more aggressively.

Do you have a separate emergency fund equal to six months of your after-tax income?
A. Yes	(5 points)
B. No	(1 point)

Do you expect to have major expenses such as college tuition costs, home down payment, etc.?
A. Yes, but I have adequately prepared for them outside of my retirement plan.	(10 points)
B. I do not expect to incur such expenses	( 8 points)
C. I will need to withdraw from my retirement account to cover these expenses during the next 10 years	(1 point)

"Investable assets" include bank accounts, retirement accounts, stocks, bonds, mutual funds, insurance cash values, etc. They do not include real property such as your residence. Approximately what percentage of your total investable assets does your retirement account represent?
A. Less than 25%	(10 points)
B. 26-50%	(8 points)
C. 51-75%	(6 points)
D. 76-95%	(2 points)
E. Over 95%	(1 point)

III PERSONAL ATTITUDE

Investment strategies should be viewed as long-term commitments that will be allowed to ride out normal fluctuations in financial markets. Experts agree that individuals often hurt their investment performance by making frequent changes to their investment allocations. Two big influences on whether you will maintain a strategy are how well you understand the risks involved and how you would react to negative news.

How important is it for you to receive a guaranteed return?
A. Not important, my focus is on average returns over time	(10 points)
B. Somewhat important, I want at least a minimal positive return each year	(5 points)
C. Very important, I need to know exactly what I'll have at retirement	(1 point)

Have you ever invested in stocks or stock mutual funds?
A. Yes, I understand market values move up and down.	(10 points)
B. No, but I do realize that values can go down	(5 points)
C. No, and the possibility of values declining concerns me greatly	(1 point)

Which of the following statements most realistically match your investment goals?
A. I want my account to grow rapidly and will undertake the risks needed to get there	(15 points)
B. I want my account to grow, but I prefer a balanced approach with smaller fluctuations in return	(10 points)
C. I prefer a fairly stable return, but would like the potential for high returns from some portion of my account	(5 points)
D. I need guaranteed returns with no potentials for loss of my principals	(1 point)
Your total is:

Relating Your Score To A Personal Investment Strategy
Points
0-30	CAPITAL PRESERVATION STRATEGY: (Graph) For individuals with short-term goals (1-5 years) looking for low volatility, preservation of capital and current income. Generally, are less concerned about increasing the value of their investments as they are with protecting what they already have.
31-50	CONSERVATIVE STRATEGY: (Graph) For individuals with intermediate-term goals (5-10 years) looking for low to moderate volatility and current income. Generally, want to see some increase in the value of their investments, but are concerned equally about loss of principal.
51-70	MODERATELY CONSERVATIVE: (Graph) For individuals with intermediate (5-10 years) to longer term goals looking for moderate volatility in both account value and returns. Generally, the account fluctuation will be moderate due to the diversification of the investments while total returns should provide for capital growth over time.
71-90	MODERATELY AGGRESSIVE: (Graph) For individuals with long-term goals (10+ years) able to accept moderate to high volatility in both account value and returns. Generally the account fluctuation will be moderately high while total returns should provide for capital growth and wealth accumulation.
90 +	AGGRESSIVE: (Graph) For individuals with long-term goals (10+ years) able to accept possibly high volatility in both account value and returns. Generally, the account fluctuation will have wide swings while total returns should be highest over time allowing for capital growth and wealth accumulation.

PUTTING YOUR STRATEGY INTO ACTION
Each mutual fund and collective trust fund investment choice available to you under your retirement plan offers a diversified portfolio of securities selected to match the goals of the fund. You may feel that a single option or a combination of options is best suited to your strategy. The sponsors of your plan may provided you with suggested mixes of options to match the strategies above. You can follow those suggestions or devise your own portfolio. Regardless of which approach you decide, take the decision-making seriously and periodically review your account to ensure that the options you selected are still in line with your investment strategy.

NOTE:
The information contained on this Web page is for educational purpose only and is not intended to provide any investment advice regarding any particular investments in the employer's plan. Individual participants are advised to seek guidance from their own investment advisor and should consider other assets, income, and investments (i.e. equity in a home, IRA investment, savings accounts and interest in other qualified and non-qualified plans) in addition to their interest in the particular plan in question.